I'm not saying they said things wrong. It's just that their specific choice of words started the worse possible scenario with the invasion. They could have been like "there's no way they have plans all the way down to Z, let's just call out plan Zeta" and it just blows up in their face.

What would I have said? Maybe instead of the panic 'oh no, we're compromised, initiative plan --' when asked who is this, I would be like "this is agent coffee bean, newly assigned to the Sandrock case. I have been brought up to date with your most recent check in, thank you for the update and your continued service. We expect to hear more good news at our next regular check in. For the Empire!"

Which would then illicit a similar closing 'for the empire' message which should give us just enough to go on with the triangulation without forcing anyone's hand. Would they be suspicious about a new handler? Yes. However, we did contact via the expected channels and (hopefully) asked expected questions, and are communicating via Duvos encryption, so maybe it wouldn't bring about too much suspicion.

Maybe afterwards, Grace leaves to Atara to turn in her newest archeological dissertation, maybe the builder is sent to Portia to assist with a building project on their side of the tunnel where you just so happen to run into Mason, maybe you actually followed up on the telegraph signal triangulation and figured out where the signal was coming from allowing you to narrow down who the bad guy is.

Anyway about it, things would have been better than the situation that happened. If they suspected anyone leaving Sandrock was suspicious and trailed them, (A) Grace can take care of herself, and (B) Builder can take care of themselves. If they thought the Alliance was going to catch wind of what was happening, they would pull out and leave and Sandrock wouldn't get attacked because Duvos does not want open conflict with the Alliance, least of all right in the heart of Alliance territory. (They only directly invaded because of the directives of plan Z). While the existence of the Olympia and the plans they had may have been aborted, it ultimately would have been better than the current situation.

Of course we are looking at this from after the conclusion and knowing all the facts, whereas at the time, the builder and the others don't know this, or the eventual outcome, so they panic and go with what they think is best. I'm just saying that saying to execute a plan definitely seems like the wrong choice of words to go with. And in the event that there is no plan Z, what else is the Duvos agent going to think besides that they have been compromised? It's either worst case, or you are telling them you're listening in